UK: New Proposal to Accelerate Insurer Investments
Photo: © Midjourney
The Prudential Regulation Authority (PRA) has unveiled a consultation paper outlining plans for a new “Matching Adjustment Investment Accelerator” (MAIA). This initiative aims to remove obstacles that currently slow down investment decisions by insurance firms, enabling more rapid financial commitments to boost the UK economy.
Key Points of the Proposal:
- The MAIA permission would allow insurers to immediately recognize the Matching Adjustment (MA) benefit before receiving full regulatory approval.
- Insurers granted an MAIA would have a 24-month window to formally apply the MA benefit to eligible assets, which reduces the likelihood of missing out on time-sensitive investment opportunities.
- The proposal supports the PRA’s secondary objective of promoting the UK’s international competitiveness and economic growth.
According to Sam Woods, Deputy Governor for Prudential Regulation and CEO of the PRA, “This innovation will enable insurers to make more rapid investment decisions and support growth in the UK economy, while protecting policyholders.”
The PRA invites feedback on this consultation, which is directly relevant to insurers currently holding or seeking an MA permission. If implemented, the MAIA could transform how insurers assess liability values, as the MA allows firms to discount their liability cash flows at a higher rate than the standard risk-free rate.
What’s Next?
The consultation period will remain open until 4 June 2025. Interested parties can review the full proposal and submit their feedback to help shape the final policy.
